If reckless banking was to be a criminal offence, should not criminally stupid bank regulations also be it?

Sir, what would you opine if UK´s Department of education decided the exams of students should be more favorably graded the more they had stayed inside and avoided the risks of going out? And this even though long term that would mean students because of the lack of exercise they will suffer much more from obesity. If they did that would you not find it to be criminally stupid? Well, that is exactly how the regulators are regulating the banks by the use of capital requirements based on perceived risks.

I mention this in reference to Philip Augar´s “Reckless banking should be a criminal offence” June 19. If a banker can get to be hauled in front of a court, not because a purposeful endangerment of a bank but because of plain stupid recklessness, should we not have the same right when it comes to regulators? In fact, given its more overreaching implications, should they not stand there accused of high treason?

For instance, Mario Draghi, during many years the Chairman of the Financial Stability Board, agreed with regulations which allowed banks to lend to Greece against only 1.6 percent in capital, a mindboggling authorized leverage of 62.5 to 1, while at the same time required banks to hold 8 percent in capital against much smaller loans given to Greek unrated business. Is that not criminally stupid? And since regulators insist on using the same insane principle developing Basel III, do we not need to set an urgent example?